Vancouver's Real Estate Market

[Hakkaboy]

Wall Street players bet Vancouver's housing bubble is about to burst - News1130

VANCOUVER (NEWS 1130) – We’ve heard the warnings for years — the housing bubble is about to burst in Vancouver. Well, some of Wall Street’s biggest investors are betting it is about to happen and are looking at the potential profits they could make if it does.

Short-sellers are looking at how much debt Canadians are holding and some are predicting a real estate crash could start as early as this fall if the US raises historically low interest rates and there is a financial spillover into this country.

Hedge fund investors who made billions of dollars in 2008 when the American housing market collapsed have been watching for a similar scenario to play out north of the border for years, but there are reports major investors are now actively “building positions” against Canadian housing targets.

“Vancouver’s market is something unto itself,” says Marc Cohodes, once considered one of the highest-profile short sellers on Wall Street.

Cohodes is out of the hedge fund business now, but spoke to NEWS 1130 from his home in Sonoma County, outside San Francisco.

“The problem is housing is no longer housing. Instead of being a shelter, homes have become more of a speculative game, akin to penny stocks, where value has lost all sense from price,” he says.

“When a place to live becomes extraordinarily speculative, where people invest rather than own to live to the degree we’ve seen in Vancouver, some people should be extraordinarily concerned.”

While some real estate professionals in Metro Vancouver believe the local housing market will be protected from any price correction by overseas investment, Cohodes thinks it is only adding to the problem.

“Frankly, it’s worse. In the brokerage business, there’s a saying: ‘You have to know your customer.’ I think with some of the prices and transactions going on in Vancouver, in my opinion there are things going on that should make someone scratch their head up there in a very big way. Whether it’s laundering money from China into Vancouver or other places, I don’t know exactly, but it’s not normal.”

No matter what happens, Cohodes says it is the ordinary home buyer who will feel the pinch the most, with people who make good incomes being pushed out of the market while some homes sit empty.

“People are getting pissed off. This concept of buying a place to park overseas money in Vancouver, to me, is a very, very dangerous concept and construct.”

Would be definitely interesting to see what happens if/when interest rates do rise.

What's was the old saying? History repeats itself? This is what happened to another Canadian market when interest rates rose, unemployment increased (look at oil/gas and potential trickle down) and drop in immigration/foreign money (what's going to happen when China escalates their crack down on corruption even further?)

Toronto Housing Bubble in 1989 | Toronto Condo Bubble

Also, in an industry highly correlated w/ the Chinese crackdown, here are the year over year results for Macau gaming industry so far this year in 2015:
2015 Macau numbers

It is down almost a whopping 40% year over year. This all started last year in 2014. In May YTD, the industry was almost 16% versus the prior year, but then the crackdown focused on money transfers and junket operators in Macau and the year finished in negative. The 2015 numbers shown above shows that Macau is now back to 2011 levels and erasing the last 3 years of double digit year over year growth.

2014 Macau numbers

What do you think is going to happen when they start looking at large money transfers into Canada?

[Spoon]

How do you even short residential real estate.

[CRS]

Originally Posted by Spoon

How do you even short residential real estate.

I was just thinking that.

So... Like sell what you have right now and then buy when it bursts?

[originalhypa]

Originally Posted by CRS

I was just thinking that.

So... Like sell what you have right now and then buy when it bursts?

I've been renting for three years waiting for this to happen...
Maybe this fall it will finally become profitable to buy real estate again? I doubt it though. There are still a ton of folks sitting on money in the bank.

That said, if Canada goes down the same road that America did in 2008, we are collectively fucked.

[westopher]

We are well on our way. Oil and real estate can't sustain our whole country's economy forever. We could have sold off our water if we didn't already sell it to nestle for like $20 per million litres.

[Tapioca]

2 ways to look at things:

The long-term prospects for Canada are poor. Aging and relatively unhealthy population (BC notwithstanding), continuing loss of arable land and long-term drought in the west, over-educated populace with a risk-averse business class, and political institutions that are unresponsive to the pace of the world economy.

We're screwed. Sell everything, and hoard cash - after all, that's what the wealthy Canadians are doing. Better yet - obtain citizenship/right of abode in other countries to hedge your bets lest shit really hits the fan.

Or just stick your head in the sand, keep doing whatever you can to keep your head above-water and hope that your investments and state medicine are there for you when inevitable disease and decline set in.

[multicartual]

Originally Posted by originalhypa

That said, if Canada goes down the same road that America did in 2008, we are collectively fucked.

Will the CND dollar drop more?


If so... damn I'll be ballin' again


Damn I might actually want to work more than an hour a day

[Gucci Mane]

this is taken from an article i read in the province today.

Count one of the world’s most influential investors — Laurence D. Fink, head of the world’s largest asset fund BlackRock Inc. — among those who believe Vancouver property is not only as good as gold, but better.

“The two greatest stores of wealth internationally today are contemporary art, and apartments in Manhattan, Vancouver and London,” Fink recently told a conference of investors in Singapore.

Jonathan Cooper of MacDonald Realty Vancouver said evidence is mounting that the city is, in fact, a special market.

“It’s an increasingly internationally-focused market with demand not just from Asia, but increasingly from Americans, too,” Cooper said.

He said he understands short-sellers are betting against Vancouver, but he believes the speculators will lose.

“Even a broken clock is right twice a day,” Cooper said. “Will there be a correction, some time? Yes, because markets are cyclical. But barring some huge external shock ... it’s hard to see a big decline.”

Will the Vancouver real estate bubble burst?

[meme405]

Originally Posted by westopher

We could have sold off our water if we didn't already sell it to nestle for like $20 per million litres.

Please stop, you responded with this argument in another thread, I typed an entire response and then the stupid browser crashed, and I really didn't want to re-type the entire thing.

I know you're not stupid, so you can't really be naive enough to miss why the government allows these companies to well for almost free. Because even if it appears free, nothing in this fucking world is free.

These companies stimulate our economy, they create jobs, they pay lots of taxes, etc. That's why the government provides them so much incentive to do business here, because they are good for us, and without that incentive (or in this case an exponential hike in the cost of water), they will pack their shit up and go elsewhere.

This deal where the government sells water has been around for fucking decades, all of a sudden vancitybuzz posts and article about it, and all the idiots constantly use this one item for all source of arguments.

[multicartual]

This is why I barely work, even if I doubled my income, my ability to afford a Vancouver detached house is still going to be tough.

I don't want to trade the best years of my life simply to say "I made it" when housing is an investment and not a place to live and enjoy life.

Instead, renting is easy and my life is highly enjoyable. The downside is, of course, relationships with my girlfriends end as you can't really take a relationship to any sort of serious level when you rent and cannot afford a detached home.

[blkgsr]

maybe that's because you're only dating soulless gold digging whores you find on grandville every weekend

[multicartual]

Originally Posted by blkgsr

maybe that's because you're only dating soulless gold digging whores you find on grandville every weekend

Last girlfriend was a 49 year old Jewish milf

Current girlfriend is a very sweet 23 year old redhead who loves baseball and riding hipster bikes

Truth is, without having the ability to afford a detached home, I see no potential in taking a relationship any farther than "girlfriend" and a lot of men agree, if only subconsciously.

A huge part of why people in Vancouver are so promiscuous is because the natural progression of relationships has been hamstrung by the monumental task of earning enough to buy a house while enjoying a decent* lifestyle! Relationships can be seen as being based on the momentum and life-progression of both partners. If you can't build the momentum, like a trout jumping up each successive waterfall to spawn, you just end up banging chicks and partying constantly.




*this will vary between person

[blkgsr]

lol not the response i was expecting but if that's the way you look at it then thumbs up...

i wasn't implying initially that there was something wrong with it...i was just taking a stab at what might have been the issue

[godwin]

Easy, actually a lot of hedge funds and firms own condos and buildings in town. They can just cash in and lock in profits.

Shorting REITs is another way.

One fact that seems to escape most people writing about this is even it takes 50% off.. prices will still back to 6 years ago.. assuming a 12% growth pa. It will still out of price range for most folks.

The organisations that will hurt most are the pension funds and CPP.. they own a lot of properties in order to fund retirement payments.

Originally Posted by Spoon

How do you even short residential real estate.

[Spoon]

Originally Posted by godwin

Easy, actually a lot of hedge funds and firms own condos and buildings in town. They can just cash in and lock in profits.

Shorting REITs is another way.

What you mentioned is just straight up selling.

REITs is commercial real estate. And since they're publicly traded, I won't be surprised that there's an ETF that shorts them. But it's still apples to oranges.

[godwin]

Eer no not all REIT are commercial.. there are plenty of residential, carehomes etc. Cressy dev has their own REIT.

All shorting involves selling and making profit.

Hedge funds don't need ETF.. they are the ETF.

Originally Posted by Spoon

What you mentioned is just straight up selling.

REITs is commercial real estate. And since they're publicly traded, I won't be surprised that there's an ETF that shorts them. But it's still apples to oranges.

[Harvey Specter]

You know you're in a massive bubble when you see "mortgage helpers" in listings for $2+ million dollar homes. In most markets, a person purchasing a $2+ million dollar home is usually sitting in the 1% and doesn't need to rent their basement or "guest" house to help with the mortgage.

[sdubfid]

Saving for your down payment?
We'll boost it with an ultra-low interest loan.*
*Up to a maximum of $12,500
The Down Payment Helper Bundle* is for first-time home buyers who need a little extra help getting to their 5% minimum down payment faster. To qualify, you'll need to have saved at least half of your down payment. You'll also need to meet our personal loan borrowing criteria.

[noclue]

I hear that a lot of HK people who bought properties in macau are underwater currently.

It'll probably motivate them more to invest in Vancouver as it is "safe"

[4444]

Originally Posted by multicartual

Will the CND dollar drop more?


If so... damn I'll be ballin' again


Damn I might actually want to work more than an hour a day

i predict it will.

US will raise rates in Sept... Canada usually would follow suit, but the Canadian economy may not be strong enough to withstand the same rate of rate increases as the US, resulting in relatively stronger USD, which is a benefit to the Cdn manufacturing economy (what's left of it).

i think we'll see 1.30 USD/CAD before too long, a 7bp increase on today

[multicartual]

Originally Posted by 4444

i think we'll see 1.30 USD/CAD before too long, a 7bp increase on today

Earlier today I actually THREW OUT my bong.


Thinking about the possibility of the CND tanking and the bubble bursting actually has me motivated to work!!!


People laugh when I say this, buuuuuut... ***many*** people in Vancouver become apathetic because the idea of thriving here seems too monumental of a task, so people give up, become lazy, and self-medicate to ease their angst.


Edit: When the carrot is dangled low enough that some people can jump and reach it, more people attempt to jump, when the carrot is super fucking high up, a lot of people give up jumping.

[westopher]

Originally Posted by multicartual

Edit: When the carrot is dangled low enough that some people can jump and reach it, more people attempt to jump, when the carrot is super fucking high up, a lot of people give up jumping.

Thats why so many people I know have completely given up on the idea of being (consumer, not mortgage) debt free. Once people hit a certain point they just say fuck it, I'll never be able to afford what I want, so I'll just keep going deeper and deeper until the only option is bankruptcy or a quick couple steps off of the side of the lions gate.

[Tone Loc]

Originally Posted by multicartual

People laugh when I say this, buuuuuut... ***many*** people in Vancouver become apathetic because the idea of thriving here seems too monumental of a task, so people give up, become lazy, and self-medicate to ease their angst.

Edit: When the carrot is dangled low enough that some people can jump and reach it, more people attempt to jump, when the carrot is super fucking high up, a lot of people give up jumping.

This. I am 22 and I find that a lot of other twenty-somethings I know are perfectly okay with living at home for the foreseeable future simply because they can't justify paying nearly $1000/mo. for rent while simultaneously saving up for a down payment on a home and be able to make the mortgage payments. Don't get me wrong, I think it's possible for one who has a decent full-time job to move out, but they'd be making huge sacrifices. Transit everywhere, ramen noodles 3x a week, rarely being able to go out (let alone travelling), etc., just makes things seem "not worth it". Ironically enough, one is forced to choose between being "independent" yet unable to do very much, or be "not independent" and do a lot more.

... obviously there may be a lack of work ethic involved, but considering the lack of higher-paying jobs in Vancouver as well as the ridiculously high entry price to buy a home, people my age are pretty much just giving up. The smarter ones, I find, are moving elsewhere. Welcome to the first stage of brain drain.

[multicartual]

Originally Posted by FunkyColdMedina

one is forced to choose between being "independent" yet unable to do very much, or be "not independent" and do a lot more.

If you're a cute young girl, you have a lot more options...


A teaspoon of sugar | The Economist


So many hot chicks are complete whores now for old geeks with money.


My girlfriend isn't the hottest, but she is a good person and would rather work a blue collar job than suck and fuck some total loser for cash!

[blkgsr]

Originally Posted by 4444

think we'll see 1.30 USD/CAD before too long, a 7bp increase on today

i cry thinking this is the reality....about to head to central and south america for a year and the USD is killing me